The United States and China have reached agreement on compensation for Nato's bombing of the Chinese embassy in Belgrade.

US State Department legal adviser David Andrews said after talks in Beijing that Washington would pay China $28m, subject to approval of the next federal budget by Congress.

China is also to pay $2.87m for the damage caused to US diplomatic property in China in the riots that followed the 7 May attack.

Angry mobs smashed windows and threw Molotov cocktails at the US embassy in Beijing, while the US consul's residence in the southern city of Chengdu was partially burned down.

"These figures reflect what both sides see as fair payment for the property damage based on the delegations' five meetings that comprised an extensive review," Mr Andrews told a news conference in the Chinese capital.

"I hope this day marks the beginning of a more positive trend in US-China relations," he said, adding that the bombing had been "tragic" and "mistaken".

The US has already paid $4.5m in humanitarian aid to the families of the three embassy staff killed and 27 injured.

'Not a precedent'

Western diplomats say Washington had sought about $5m for damage to its missions and was reluctant to set a precedent for compensation for damage during military conflicts.

"This was a unique and tragic event. It does not set a precedent," a US official said.

Ties plunged to their frostiest in decades after the bombing as China severed high-level military contacts with the US and suspended talks on human rights, trade and security issues in retaliation.

The BBC's Duncan Hewitt in Beijing says the deal removes a major obstacle to the resumption of normal ties between the two countries.

But he says it is not clear whether China fully accepts the American case that Nato planners mistook the Chinese embassy for another building because their maps were out of date.

A Chinese spokesman repeated the government's demand for a full explanation and for those responsible for the attack to be punished.

The official Xinhua news agency quoted Chinese Foreign Ministry spokesman Zhu Bangzao as saying the $28m would cover damage to property, but made no mention of the US counter claim.

The bombing was a "gross violation of the universally recognised international law" and an "internationally wrongful act by the US", he said.

"The US Government should conduct a comprehensive and thorough investigation into the bombing, severely punish the perpetrators and give a satisfactory account of the incident to the Chinese Government and people as soon as possible."